Bank of England Revelas a Blockchain Proof-of-Concept for Sharing Data
Britain’s Central Bank, the Bank of England (BoE), published a Proof-of-Concept (PoC) which examines the possibilities of allowing users to share data in a safe and secure network. By partnering with blockchain infrastructure provider, Chain, the Bank is exploring how to maintain privacy over a distributed ledger-based network while still allowing a regulatory overview of the data.
The central bank perceives that an ideal scenario would be to design "a distributed ledger system in such a way that transactions remain private whilst keeping all data shared across the network, and at the same time maintaining a regulatory view of all transactions."
it shows how the U.K.'s central bank aims to advance distributed ledger technology (DLT) development for existing business functions, while avoiding complete concealment of transactions from the authorities.
Even though the PoC was not implemented practically, questions arose concerning the development of a distributed network system, whereby allowing participants from all over the world to share a blockchain network raises privacy concerns. In such cases, even with the use of cryptography, people may find ways to access transactions of other users. The Bank of England took a central authority and a regulator as an example. If they were exchanging data and transferring assets, transactions would have to be concealed from other participants. Plus, it would have to be ensured that people in the “consensus process [do] not have full visibility of transaction details.”
The Bank of England reported that the ideal scenario is still in the early stages, but it is still “theoretically possible”, as “the trade-offs would still need to be further explored, especially with respect to scalability, speed of transaction processing and risks around the security of the cryptographic techniques employed.”